It was the upgrade that launched hundreds of unhappy tweets, and even its own “occupy” hashtag. On Wednesday, social media analytics service Klout unveiled a tweak to the algorithm to make scores more accurate. For many, this meant their score dropped.

But for the four-year-old company, the changes represented the latest phase in the evolution of a product that was founded when chief executive Joe Fernandez (score: 68/100) had his jaw wired shut and communicated using social media.

Klout began just by measuring reach and influence of users on Facebook and Twitter, but that expanded quickly—particularly in the last six months. Now it measures almost any type of social interaction you can have on the web, including Google+, LinkedIn, Foursquare and Flickr. Wordpress.com is another recent addition, and integration with services like Yelp and Quora are reportedly on the way. Over the three years, 100 million people have logged on to check out their scores, Fernandez said in an interview prior to Wednesday’s upgrade.

The fledgling company initially struggled to attract venture capital in the midst of the recession, but has since landed two rounds of funding worth $10 million, the first lead by Kleiner Perkins Caulfield and Byer’s sFund. While Fernandez didn’t reveal the company’s revenue, he did say that the focus of the company so far has been on perfecting the product. “It’s going to take time to get that right,” he says. “Once you get that there’s plenty of opportunity.”

Marketing company Eloqua's chief technology officer Steve Woods believes Klout has an interesting challenge ahead, in terms of monetizing its service. Several other companies perform similar services—Kred is one, Sulia is another. It's fairly easy for competitors to throw together a basic social analytics tool, Woods says, and the question for Klout is whether a basic, free service is good enough for most marketers. If it's not, Klout has a good chance in the future, he says.

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